M&A Outlook
M&A accelerated in the consumer, energy and basic materials sectors in 2017, bolstered by megadeals. In the consumer sector, our forecast assumes the proposed US$42.5 billion merger between Essilor and Luxottica closes in 2017. Given the potential for stronger global consumer spending in 2018, we expect even more dealmaking in the consumer sector next year, rising to US$633 billion, along with finance, which we forecast to reach US$616 billion.
M&A accelerated in the consumer, energy and basic materials sectors in 2017, bolstered by megadeals. In the consumer sector, our forecast assumes the proposed US$42.5 billion merger between Essilor and Luxottica closes in 2017. Given the potential for stronger global consumer spending in 2018, we expect even more dealmaking in the consumer sector next year, rising to US$633 billion, along with finance, which we forecast to reach US$616 billion.
In energy, the largest deals in 2017 were General Electric’s acquisition of Baker Hughes for US$32 billion and the US$21 billion merger between Energy Transfer Partners and Sunoco. Vale’s US$21 billion merger with Valepar was the largest deal in basic materials sector. In both sectors, we forecast a gradual slowdown in the years ahead, as weaker growth in commodity demand in emerging markets such as China undermines the outlook for global prices and investment.
On the downside, pharma and healthcare underperformed in 2017, possibly as a result of uncertainty about US healthcare policy. Going forward, however, longer-term trends such as aging and demographics should drive higher levels of dealmaking.
M&A activity in the tech sector also dropped in 2017, yielding deal values of US$295 billion. But several trends of embedding new technology across sectors, plus activist investment in tech firms by emerging markets such as China and Saudi Arabia, suggest that deal values will rebound in the next two years.
IPO Outlook
From a sectoral perspective, tech and telecom is expected to drive the rebound in IPO activity in 2018, aided by the Chinese government’s efforts to spur tech firms to go public. With household spending remaining strong globally, consumer companies should also benefit from positive market conditions. Likewise, with low interest rates likely to support household and corporate borrowing in the next few years, finance issues should also drive IPO activity higher.
From a sectoral perspective, tech and telecom is expected to drive the rebound in IPO activity in 2018, aided by the Chinese government’s efforts to spur tech firms to go public. With household spending remaining strong globally, consumer companies should also benefit from positive market conditions. Likewise, with low interest rates likely to support household and corporate borrowing in the next few years, finance issues should also drive IPO activity higher.
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